Economist: Immigration reform can revive U.S. economy

Conservative economist Douglas Holtz-Eakin is out with a new study indicating that immigration reform can reinvigorate the American economy.

“Immigration reform is a potentially powerful tool of economic policy that can improve economic growth and the budgetary outlook,” he told The Daily Caller.

“A benchmark immigration reform would raise the pace of economic growth by nearly a percentage point over the near term, raise GDP per capita by over $1,500 and reduce the cumulative federal deficit by over $2.5 trillion,” the executive summary of the study concludes.

Holtz-Eakin is currently the president of the American Action Forum, the policy institute which published the study. Previously, he served as director of the non-partisan Congressional Budget Office and as the chief economic adviser to John McCain’s 2008 presidential campaign.

“It is over 800 pages long and it is too soon to draw strong conclusions,” he said. “On the whole, however, the framework appeared promising.”

Holtz-Eakin dismissed concerns from critics that immigration reform, like that proposed in the Gang of Eight’s bill, would adversely effect wages and job prospects for Americans, especially those at the bottom of the economic ladder.

“Americans are competing in a global market,” he said, “whether the remainder of the labor pool is across the street, across the state, or across an ocean makes no difference for the future of wages. Making sure our workers can compete is an important policy goal; it is a different question than immigration.”

See below The Daily Caller’s full interview with Holtz-Eakin about his study and the economics of immigration:

What’s the bottom line of the study?

Immigration reform is a potentially powerful tool of economic policy that can improve economic growth and the budgetary outlook.

Critics of immigration reform say that regularizing the estimated 11 million illegal immigrants in the U.S. would negatively affect our national debt. What did you find?

My study did not focus on any single aspect of the potential immigration reform bill. But as an overview, it suggests that any analysis that excludes the growth impacts is incomplete.

Even if the immigration bill is good for the economy and most Americans overall, what about those at the very bottom end of the economic ladder? Won’t it hurt their wages and prospects for employment, at least in the short term?

Americans are competing in a global market, whether the remainder of the labor pool is across the street, across the state, or across an ocean makes no difference for the future of wages. Making sure our workers can compete is an important policy goal; it is a different question than immigration.

Did you adjust the existing models to recognize the historically low workforce participation rate, which is reflected by the estimate of 20 million unemployed or underemployed Americans?

Immigration reform and implementation will take a long time — upwards of 10 to 15 years. I did not see any reason to tailor the analysis to the particulars of any year.

Your study shows that immigration is a net positive for the U.S. But is there a point at which we could bring in too many new immigrants and it would be detrimental? Or should there be no limits on immigration?

There certainly may be an immigration reform that does not appear desirable, on balance. But my focus is not on imponderables, but the actual proposals under debate.

What will reforming the immigration system away from family chain migration toward immigration based on education and jobs skills mean for the U.S. economically?

It is an opportunity to raise labor productivity, economic growth and competitiveness. That means a better standard of living for this generation and the future.

How do your findings compare with other studies which have looked at immigration reform?

We only now have a specific reform bill. It will be better to compare the findings of analyses of the actual proposed reforms, as it will provide apples-to-apples comparisons.

What is the most interesting statistic you uncovered while producing the study?

U.S. fertility being at 1.9 births, below the replacement rate of 2.1.

What do you think of the Gang of Eight bill? What would you change in it to make it better?

It is over 800 pages long and it is too soon to draw strong conclusions. On the whole, however, the framework appeared promising.

How was the study conducted?

It was based on the existing research literature, and drew on demography, productivity, and budgetary analyses.